Houston-based Lillian Nicola Asset Management have designed a diversified forex strategy which performs the primary function as a discretionary, directional trading methodology which enters and disposes of currency pairs within the spot forex market.
The company is a 4.7 exempt NFA Member Commodity Trading Advisor (CTA) which was founded by Alessandro Torre and Steven Wendlandt in May 2012 and provides managed forex programs to its clients.
The functionality of the program is intended to capture price trends lasting anywhere from 2 weeks up to 6 months within these markets. The program utilizes a trading approach based upon the tenets of chaos theory, Elliot Wave theory, fractal geometry and price momentum. Positions are scaled into by using a reverse pyramiding technique in attempts to reduce volatility risk as the most risk on any position exists before a trend has been established by price movement and time.
As an off-exchange forex investment strategy, it is aimed at obtaining high risk-adjusted returns while bearing in mind the protection of investor capital against adverse volatility using a discretionary methodology.
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There are four categories by which the tenets of the strategy are defined by LNAM:
Non-correlated Investment – This provides an added layer of portfolio diversification with minimal correlation to other investments.
Risk Management – Risk control is achieved through static and dynamic parameters whilst adhering to managing correlation risk.
Liquidity Advantage – Spot forex markets offer sufficient market depth and liquidity to adjust positions quickly without detracting from performance.
Tax Advantage – The United States IRS treats returns from these investments favorably under section 1256. This works out at 60% long term and 40% short term capital gains. There is some consideration as to whether Congress may amend this in the future however.
“Our goal,” says Lillian Nicola’s co-founder and principal Alessandro Torre, “is to obtain consistently high risk-adjusted returns when compared to other managers in the currency and managed futures space.”